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We do not recommend that you setup new ChiliProject instances and we urge all existing users to migrate their data to a maintained system, e.g. Redmine. We will provide a migration script later. In the meantime, you can use the instructions by Christian Daehn.
The "Watcher" filter should show all users. (Feature #566)
Currently, the watcher filter only has the option "me" despite there being a permission "view issue watchers".
I have a patch that populates the watcher filter with the same users as the other user-based filters if the user has the "view issue watchers" permission in at least one project, and adds a restriction to only the projects the user has the "view issue watchers" permission on, except when the only watcher selected is "me".
I'll see if I can tweak the query a little more to include the issues the user watches in projects he doesn't have the "view issue watchers" permission on when he selects other users as well.
I've added some tests for the filling of the filter so that there's no "obvious" leakage of private data, I don't trust the current style of the filter tests though so I didn't add any to not create any (imo) false sense of tested- and thus correctness.
The pull request is 104 on GitHub, I'm comfortable merging it but would like a second opinion before doing so.